The Relationship between CO2 Emission, Energy Consumption, Urbanization and Trade Openness for Selected CEECs

Abstract

This paper investigates the relationship between CO2 emission, real GDP, energy consumption, urbanization and trade openness for 10 for selected Central and Eastern European Countries (CEECs), including, Albania, Bulgaria, Croatia, Czech Republic, Macedonia, Hungary, Poland, Romania, Slovak Republic and Slovenia for the period of 1991–2011. The results show that the environmental Kuznets curve (EKC) hypothesis holds for these countries. The fully modified ordinary least squares (FMOLS) results reveal that a 1% increase in energy consumption leads to a %1.0863 increase in CO2 emissions. Results for the existence and direction of panel Vector Error Correction Model (VECM) Granger causality method show that there is bidirectional causal relationship between CO2 emissions - real GDP and energy consumption-real GDP as well.